London’s progress as a financial center could stall because of the upheaval Brexit will bring to the industry, according to Goldman Sachs Chief Executive Officer Lloyd Blankfein.
I would caution people against exaggerating this phenomenonCity of London's Special Representative to the EU
Interviewed by the BBC Blankfein was asked whether London’s long-term expansion over the past three decades would go into reverse.
He said: “I don’t think it will totally reverse. It will stall, it might backtrack a bit, it just depends on a lot of things about which we are uncertain and I know there isn’t certainty at the moment.”
Goldman Sachs has “contingency plans” to move people depending on the outcome of the negotiations, he said.
Indeed Britain’s financial sector – the City of London – is abuzz with contingency plans.
In the near future a raft of banks are expected to announce what they will do when Britain leaves the European Union, including moving staff to places like Frankfurt and Paris.
Caution against exaggerating this phenomenon
The man whose job it is to talk up London’s role as Europe’s international financial centre says we should not exaggerate the numbers that will leave but admits the UK economy could suffer.
Jeremy Browne, the City of London’s Special Representative to the EU, said: “There are some banks here in London that will shift some of their activities that need to be in the single market out of London, when London is no longer in the single market, into a city that is in the single market. That is logical. But I would caution people against exaggerating this phenomenon – most of the activity of those banks I predict will stay here in London, because London is the big global financial centre on the continent of Europe.”
He added: “A lot of people work in the City of London, it raises a lot of tax revenue for the British government, so it services the British economy as well as the wider European economy.”
Browne cautioned that an acrimonious Brexit would harm both the UK and Europe and that EU negotiators must be balanced in their approach, not looking to undermine London.
One senior Danish banker agrees. J.P. Leschly Neergaard, Global Head of International Banking at Danske Bank, said: “London is a financial hub, not only for Europe and for the EU, but for the whole world. London safeguards a large number of Europe’s financial interests and has been doing so for a number of years.”
There are predictions of tens of thousands of jobs being lost if Britain fails to secure adequate access to EU markets after Brexit.
Just this week Standard Chartered and JP Morgan announced contingencies.
The Asian focused British-based bank said it will make Frankfurt its European base of operations.
The US giant JP Morgan said it will moved hundreds of staff to Frankfurt, Luxembourg and Dublin.